Zomato’s Shares Soar as ‘Pure Veg Fleet’ Plans Get Scrapped

In a recent turn of events, Zomato, the popular online food delivery platform, witnessed a significant uptick in its shares, surging by 3% to reach Rs 170. This surge comes hot on the heels of the company’s decision to abandon its plans for a ‘pure veg fleet’ as part of its upcoming ‘pure veg mode,’ aimed at catering to the preferences of Indian vegetarian customers.

Zomato share price

Investors responded positively to this development, with Zomato shares gaining 4.35 points, marking a 2.63% increase on Thursday (March 21), reaching Rs 169.90 per share on the NSE. Notably, several brokerage firms have maintained a ‘buy’ rating on Zomato, with UBS setting a target price of ₹195 per share, citing expectations of sustained year-on-year growth for the company.

CEO and co-founder Deepinder Goyal explained the decision to backtrack on the ‘pure veg fleet’ initiative, stating concerns about potential landlord issues faced by some customers due to the segregation of delivery partners. Despite earlier claims of an “overwhelmingly positive” response to the segregated fleet proposal, the company prioritized customer welfare in this instance.

However, criticism has emerged following this decision. Sheikh Salauddin, President of the Indian Federation of App-Based Transport Workers (IFAT), questioned Goyal’s stance, pointing to previous statements emphasizing that “food has no religion.” The move sparked concerns about potential categorization of delivery partners based on factors like caste, community, or religion.

This isn’t the first time Zomato has found itself embroiled in controversy. Last year, the company issued an apology for an advertisement featuring a Dalit character from the film Lagaan, raising accusations of insensitivity and exploitation. The advertisement prompted the National Commission for Scheduled Castes (NCSC) to issue a notice, highlighting the importance of responsible advertising practices.

As Zomato navigates through these challenges, its recent share rally reflects the dynamic landscape of the food delivery industry and the company’s ongoing efforts to balance innovation with sensitivity to customer preferences and societal concerns.